In the wealthy countryside of Hampshire, England, the journey between Candover Valley and the River Arle takes about 15 minutes; for Candover Partners, the journey to become Arle Capital Partners has taken nearly two years.

Candover Partners’ journey began early last year when it emerged that its listed parent Candover Investments would struggle to honour a €1bn commitment to its latest fund. Talk of a spin-out was followed by months of uncertainty and a failed takeover approach. Last week the firm finally became independent.

About 24 of the 36 Candover staff will be leaving to launch Arle, providing the spin-off is approved by shareholders on December 22.

Arle executives will pay a total of £3m to acquire interests in private equity funds owned by Candover Investments and commit a further £1m to future deals. Secondaries buyout firm Pantheon will invest £56m. Pantheon and Arle are buying 29.1% of Candover Investments’ fund interests in Candover Partners funds at a 14.3% discount to the £70m value of the assets on Candover Investments’ books.

Shares of Candover Investments were trading at a 21.4% discount to net asset value when the deal was done.

Proceeds from the transaction will help Candover Investments to allay liquidity concerns and to deal with a near £200m bond. These two concerns are understood to have been a sticking point for Canadian pension fund Alberta Investment Management Corporation, whose talks to acquire the investor broke down earlier this year.

Most of Arle’s £4m commitment is being stumped up by four top executives: new Arle chief John Arney, who is Candover Investments’ current managing partner, and partners Javier Abad, Mark Dickinson and Nils Stoesser. About half of the personnel are support staff.

Elly Livingstone, a partner focusing on secondaries at Pantheon, said the personal commitment from the Candover Partners executives was “central” to the way Pantheon backed spin-offs as it was keen to ensure the management team had its own money invested. He said Pantheon had known the Candover Partners team for about 20 years and “proactively approached” the company to do the deal.

The fund interests being sold to Arle relate to assets in the Candover Partners’ 2001, 2005 and 2008 funds. They include: oilfield services portfolio company Expro International; Spanish theme park operator Parques Reunidos; Dutch engineering group Stork; French tax advisory group Alma Consulting Group; optical component company Qioptiq; and safety group Capital Safety.

The crucial question for Arle is whether it will be able to raise a new fund. One source with knowledge of the situation said it would be likely to attempt to do so over the next 12 to 18 months and that the size would probably be between £500m and £1bn. Arle declined to comment.

Industry sources said that while this appeared large, especially for a firm that many will view as a start-up, it reflected the Candover Partners team’s experience, which has been mainly at the large buyout end of the market.

Observers have pointed to the backing of Pantheon – one of the world’s biggest fund of funds – as a key endorsement for the firm.

Although question marks remain around the performance of the team’s 2005 fund, its earlier vehicles have generated strong returns. Its 1997 fund managed an investment multiple of nearly two times, and its 2001 fund returned more than two times the money invested.

Chris Hale, a partner at Travers Smith, which advised Arle on the deal, said: “If you look at the track record of the individuals in Arle it is actually quite good. Many of them were either more recent or were not involved in the firm’s most problematic investments.”

As part of the change Candover Investments’ chairman, Gerry Grimstone, is stepping down after 11 years on the board. Chief executive Malcolm Fallen said the firm was seeking a replacement.